The Global Financial Crisis and Workers' Remittances to Africa: What's the Damage?

Abstract

We estimate the impact of the recent global economic crisis on remittances into Africa for the period 2009-2010. Interestingly, the majority of remittances seem to flow within the African continent. The magnitude of the forecast decreases in remittance flows into African countries varies between 3 and 14 percentage points. African migrants to Europe will be hardest hit while migrants within Africa will be least affected by the crisis. We estimate the impact of the drop in remittances on home country GDP. For countries where the ratio of these flows to home country GDP is high, GDP is expected to drop by almost 2 percent for 2009. The negative effect of the crisis, however, is likely to be short-lived, as host country income is likely to rise in 2010 for virtually all African remittance-recipient countries.